Anthony Gagliano & Co., Inc. v. Openfirst, LLC

2014 WI 65

SUPREME COURT OF WISCONSIN
CASE NO.: 2012AP122
COMPLETE TITLE: Anthony Gagliano & Co., Inc.,
Plaintiff-Appellant,
v.
Openfirst, LLC and New Electronic Printing
Systems, LLC,
Defendants-Respondents,
RWK Enterprises, Inc., d/b/a Alphagraphics,
Inc., OFH
Distribution, LLC , f/k/a Openfirst Holdings and
New
Diversified Mailing Services, LLC,
Defendants,
Quad Graphics, Inc. and Robert Kraft,
Defendants-Respondents-Petitioners.

REVIEW OF A DECISION OF THE COURT OF APPEALS
346 Wis. 2d 47, 828 N.W.2d 268
(Ct. App. 2013 – Published)
PDC No: 2013 WI App 19

OPINION FILED: July 15, 2014
SUBMITTED ON BRIEFS:
ORAL ARGUMENT: December 18, 2013

SOURCE OF APPEAL:
COURT: Circuit
COUNTY: Milwaukee
JUDGE: Dennis P. Moroney

JUSTICES:
CONCUR/DISSENT: BRADLEY, J., concurs in part, dissents in part.
(Opinion filed.)
DISSENTED: ABRAHAMSON, C.J., dissents. (Opinion filed.)
NOT PARTICIPATING:

ATTORNEYS:
For the defendant-respondent-petitioner Quad Graphics,
there were briefs by Michael B. Apfeld, Michael D. Huitink, and
Godfrey & Kahn, S.C., Milwaukee, and oral argument by Michael B.
Apfeld.
 For the defendant-respondent-petitioner Robert Kraft, there
were briefs by Ann M. Maher, Lisa M. Lawless, and Whyte
Hirschboeck Dudek S.C., Milwaukee, and oral argument by Lisa M.
Lawless.

For the plaintiff-appellant, there were briefs by Thomas
Armstrong, Beth J. Kushner, and Von Briesen & Roper, S.C.,
Milwaukee, and oral argument by Thomas Armstrong.

An amicus curiae brief was filed by Thomas D. Larson,
Madison, on behalf of the Wisconsin Realtors Association.

2
 2014 WI 65
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2012AP122
(L.C. No. 2008CV17601)

STATE OF WISCONSIN : IN SUPREME COURT

Anthony Gagliano & Co., Inc.,

Plaintiff-Appellant,

v.

Openfirst, LLC and New Electronic Printing
Systems, LLC,
FILED
Defendants-Respondents,
JUL 15, 2014
RWK Enterprises, Inc., d/b/a Alphagraphics,
Inc., OFH Distribution, LLC , f/k/a Openfirst Diane M. Fremgen
Holdings and New Diversified Mailing Services, Clerk of Supreme Court
LLC,

Defendants,

Quad Graphics, Inc. and Robert Kraft,

Defendants-Respondents-Petitioners.

REVIEW of a decision of the Court of Appeals. Affirmed in

part, reversed in part, and remanded.
 No. 2012AP122

¶1 PATIENCE DRAKE ROGGENSACK, J. We review a decision

of the court of appeals1 reversing the circuit court's order2

dismissing plaintiff Anthony Gagliano & Co., Inc.'s (Gagliano)

claims against defendants New Electronic Printing Systems, LLC;

Openfirst, LLC; Robert Kraft; and Quad/Graphics, Inc.

Gagliano's claims concern rent allegedly owed under several

commercial leases. This case presents two issues for our

review: (1) whether Gagliano gave sufficient notice to extend

the leases to the time when the alleged breach occurred; and (2)

whether Quad/Graphics was a subtenant of the lessee or an

assignee of the leases.

¶2 As to the first issue, we conclude that Gagliano's

notice was valid. Gagliano provided notice: (1) to the entity

designated as the tenant on the original lease; (2) to the

entity who was the current tenant at the time of the notice; and

(3) to the entity a subsequent amendment of the lease designated

as the tenant. The notice is also valid because the current

tenant at the time Gagliano sent the notice had actual notice
that Gagliano was exercising its alleged right to extend the

leases. Accordingly, we affirm the portion of the decision of

the court of appeals that reversed the circuit court's directed

verdict, which had concluded that Gagliano's notice was not

valid. We remand to the circuit court for fact-finding

1
Anthony Gagliano & Co. v. Openfirst, LLC, 2013 WI App 19,
346 Wis. 2d 47, 828 N.W.2d 268.
2
The Honorable Dennis P. Moroney of Milwaukee County
presided.

2
 No. 2012AP122

necessary to decide the merits of Kraft's remaining arguments

relating to the lawfulness of the extension provision in the

leases.

¶3 In regard to the second issue, we conclude that

Quad/Graphics is not liable to Gagliano because Quad/Graphics

was a subtenant of the lessee, not an assignee of the leases.

Undisputed evidence shows that New Electronic Printing Systems,

the assignee of the original tenants, did not transfer its

entire remaining leasehold estate to Quad/Graphics. Because

Gagliano and Quad/Graphics did not share privity of estate, it

is not an assignee. Therefore, we do not hold Quad/Graphics

liable for New Electronic Printing Systems' alleged breach of

contract to which Quad/Graphics was not a party. Accordingly,

we reverse the portion of the decision of the court of appeals

that reversed the order of the circuit court granting summary

judgment in favor of Quad/Graphics and remand to the circuit

court for dismissal of all claims against Quad/Graphics.3

I. BACKGROUND
¶4 In 1996, Robert Kraft formed Electronic Printing

Systems, Inc.,4 a data processing company that helped businesses
3
On a motion for summary judgment, the circuit court found
Quad/Graphics was "not an alter ego under the circumstances of
this case." While Gagliano argued for reversal of that
determination to the court of appeals, it makes no such argument
in this review. We therefore deem that argument abandoned,
requiring no further consideration. See Gister v. Am. Family
Mut. Ins. Co., 2012 WI 86, ¶37 n.19, 342 Wis. 2d 496, 818 N.W.2d
880.
4
This is a different corporate entity from New Electronic
Printing Systems, LLC, which is a party to this action.

3
 No. 2012AP122

with their billing operations. Over the course of about 12

years, that company was rebranded, restructured, and sold to

various entities. It also changed locations within Milwaukee's

third ward from its original facility on Buffalo Street to

Gagliano's facility at 300 North Jefferson Street, where it

remained until it went out of business.

¶5 This case involves several leases that the company and

its progenies had with Gagliano. It requires us to determine

whether Gagliano provided valid notice to extend those leases to

the time of the alleged breach. It also requires us to

determine whether Quad/Graphics, the last entity to acquire

assets of what was Electronic Printing Systems, can be held

liable for that alleged breach. Before reaching these issues,

we review the leases and describe the various changes the

company underwent that bear on our decision.

A. The Leases

¶6 There are two North Jefferson Street leases that

underlie this action: the May 22, 2000 lease and the May 18,
2001 lease. Both leases were amended numerous times as will be

explained below.

¶7 On April 11, 2000, Gagliano and Kraft entered into a

lease for 50,000 square feet of property in the Jefferson Street

facility for a term of five years. The lease initially gave the

tenant, which the lease listed as "Electronic Printing Systems,"

the right to extend the lease for "two consecutive additional

periods of three years." The record shows that this section was
crossed out.
4
 No. 2012AP122

¶8 On May 22, 2000, Gagliano and Kraft executed a revised

version of the lease, which superseded the April 11, 2000

version. Whereas the first lease covered only 50,000 square

feet of property, the May 22, 2000 lease covered 90,000 square

feet, divided into two leased premises. The portion of the

lease for the initial 50,000 square feet expired June 23, 2006.

The portion of the lease for an additional 40,000 square feet

expired six years after the tenant took occupancy.5

¶9 The May 22, 2000 lease contained several terms that

bear on our analysis. First, it provided that upon notice at

least 120 days before the expiration of the initial term,

Gagliano had the right to extend the lease for an additional

four-year term. Kraft claims that Gagliano fraudulently

inserted this extension right for the landlord in place of the

tenant's right to extend that was set out in the April 11, 2000

lease. Second, the May 22, 2000 lease provided that Gagliano

was to send notices to Electronic Printing System's Buffalo

Street address prior to commencement of the lease and to the
Jefferson Street facility thereafter. Third, Kraft personally

guaranteed the May 22, 2000 lease and was, along with Electronic

Printing Systems, to remain liable in the event of any sublease

or assignment, both of which required Gagliano's consent.

¶10 About a year after executing the May 22, 2000 lease,

Kraft decided to lease additional space in the Jefferson Street

5
The leases referred to the leased spaces as "Demised
Premises I" and "Demised Premises II," respectively. We will
refer to them as the first and second leased premises.

5
 No. 2012AP122

facility for his son's printing business. On May 18, 2001,

Gagliano and Kraft, this time on behalf of Openfirst, Inc.,

executed a new lease for an additional 1,848 square feet in the

Jefferson Street facility that expired 16 months after the

completion of certain work. This was a new lease (the 2001

lease) and not an amendment of the May 22, 2000 lease. Gagliano

concedes that Kraft did not guarantee the 2001 lease. The 2001

lease did not provide for any extensions of the lease term by

Gagliano.

¶11 Gagliano and Kraft amended the 2001 lease twice to

extend its term, first to November 7, 2004 and then to June 23,

2006. The second amendment added a provision that permitted

Gagliano to extend the lease for an additional four-year term by

giving notice within 120 days of the lease's expiration.

¶12 Gagliano and Kraft also amended the May 22, 2000 lease

in a document that lacks a date of execution, but states that it

"commences" October 23, 2003. This amendment added 8,900 square

feet of space in a third leased premises and designated
"OpenFirst, Inc., successor in interest to Electronic Printing

Systems" as the appropriate recipient for further notice.

¶13 On November 6, 2002, Openfirst, Inc. and related

companies sold their assets to Openfirst Holdings, LLC; New

Diversified Mailing Services, LLC; and New Electronic Printing

Systems. As part of the asset purchase, the leases that

underlie this action were assigned to the buyers. Gagliano

consented to the assignment on the condition that the "Tenant
and any and all guarantors of [the] Lease[s] . . . remain fully
6
 No. 2012AP122

liable under [the] Lease[s]." Gagliano also consented to New

Electronic Printing System's subsequent assignment of the leases

as collateral to Associated Bank, NA, again on the condition

"that none of the original obligors and/or guarantors" be

released from liability.

¶14 On December 29, 2005, Gagliano sent notice of its

intention to extend both leases for an additional four-year

term. He sent the notices to the persons, entities, and

addresses that follow:

Robert Kraft
300 N. Jefferson St.
Milwaukee, WI 53202

Electronic Printing Systems, Inc.
300 N. Jefferson St.
Milwaukee, WI 53202

Open First, Inc.
300 N. Jefferson St.
Milwaukee, WI 53202

Target Marketing Solutions, Inc.
300 N. Jefferson St.
Milwaukee, WI 53202
¶15 Kraft received Gagliano's notice and informed Gagliano

that he did not "recognize" the extension as valid. New

Electronic Printing Systems remained in the facility and

continued to pay rent into the extended period.

¶16 At the time Kraft received Gagliano's notice, he had

begun negotiations with Quad/Graphics to restructure the

businesses. As part of the restructuring agreement

"Quad/Graphics loaned money to, and received a promissory note
from the following entities so they could buy Quad/Graphics's

7
 No. 2012AP122

interest in the business: Openfirst [Holdings], LLC; New

Diversified Mailing Services, LLC.; and New Electronic Printing

Systems, LLC." Anthony Gagliano & Co. v. Openfirst, LLC, 2013

WI App 19, ¶17, 346 Wis. 2d 47, 828 N.W.2d 268 (internal

quotation marks omitted). At the end of this transaction, New

Electronic Printing Systems still owned the leases. Kraft

remained a minority shareholder and officer until September

2007, when Quad/Graphics terminated his employment.

¶17 The restructuring with Quad/Graphics did not spell

success for the companies involved. About two years later, New

Electronic Printing Systems went out of business. Vice

President and General Counsel of Quad/Graphics Andrew Schiesl

explained the arrangement that followed:

[New Electronic Printing Systems] was going out of
business, [and] it owed QuadGraphics money as a
borrower because QuadGraphics was a lender to it. As
part of the ultimate resolution of that loan . . . the
remaining business[, New Electronic Printing Systems,
Inc.,] was effectively surrendered to QuadGraphics to
pay back, to try and pay back the loan. QuadGraphics
then started effectively sub-contracting or doing the
business that it had just taken over at that point,
and it needed to enter into a sublease with the
sublessor so they could continue to use that space.
¶18 On June 23, 2008, to accomplish this arrangement, New

Electronic Printing Systems and Quad/Graphics entered into two

contracts. The first was the Voluntary Surrender Agreement and

the second was the Sublease for certain space at the North

Jefferson Street facility.

¶19 In the Voluntary Surrender Agreement, New Electronic
Printing Systems agreed to surrender collateral to

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 No. 2012AP122

Quad/Graphics, and Quad/Graphics could, "in its sole discretion,

accept" the collateral or "any portion thereof." New Electronic

Printing Systems did not tender, and Quad/Graphics did not

accept, surrender of the leases. In this regard, the Voluntary

Surrender Agreement stated, "For the avoidance of doubt, the

Collateral shall not include any lease for real property."

¶20 The Voluntary Surrender Agreement permitted

Quad/Graphics to "store the Collateral at [the North Jefferson

Street facility] at no charge to Quad until all of [New

Electronic Printing Systems, LLC's] obligations to Quad are

satisfied in full or until disposition of the Collateral,

whichever occurs earliest." Quad/Graphics and New Electronic

Printing Systems set forth the terms of the storage arrangement

in the Sublease, which expired October 31, 2008, unless

terminated sooner by either party.6 Gagliano did not sign a

written agreement consenting to the sublease.

¶21 Quad/Graphics' communication with Gagliano began when,

on September 1, 2008, Schiesl wrote to Gagliano informing
Gagliano that New Electronic Printing Systems intended to vacate

6
The copy of the Sublease in the record does not bear a
signature on behalf of Quad/Graphics, but the parties do not
dispute that Quad/Graphics did sign the Sublease. On
December 6, 2013, Quad/Graphics moved to correct the appellate
record and substitute a complete copy of the document that
includes a signature page bearing the signature of Andrew
Schiesl on behalf of Quad/Graphics. Gagliano opposed this
motion. We reserved ruling on the motion until after oral
argument, and now deny it. There is no dispute that
Quad/Graphics did sign; therefore, the signed copy is not
necessary to our decision.

9
 No. 2012AP122

and surrender the Jefferson Street facility on October 31, 2008.

When Gagliano did not receive rent allegedly owed after that

date, Gagliano's attorneys notified Kraft, Electronic Printing

Systems, New Electronic Printing Systems, and Openfirst, Inc.,

that they were in default of the leases. This suit followed.

B. Procedural History

¶22 On June 4, 2009, Gagliano brought breach of contract

claims against New Electronic Printing Systems, Quad/Graphics,

and Kraft.7 Gagliano claimed that its December 29, 2005 Notice

of Landlord's Extension of Leases extended the terms of the

May 22, 2000 lease for the first and third leased premises, as

well as the 2001 lease for 1,848 square feet of space in the

same building, to June 23, 2010. Gagliano also claimed that the

notice extended the lease for the second leased premises to

January 23, 2012.

¶23 Gagliano argued that New Electronic Printing Systems,

as an assignee of the primary lease, was liable for prematurely

vacating the premises, and Kraft was liable as a guarantor. As
to Quad/Graphics, Gagliano claimed that Quad/Graphics had taken

an assignment of the leases when it purchased New Electronic

Printing Systems' assets in 2006 and therefore, was liable for

the extended terms of the leases as well.

¶24 Quad/Graphics moved for summary judgment, arguing that

there was no evidence that Quad/Graphics had taken a written

7
Gagliano also brought claims against several other
entities that did not participate in this review.

10
 No. 2012AP122

assignment of the leases, which the statute of frauds required,

and that the doctrines of waiver and estoppel barred Gagliano's

claims. The circuit court granted Quad/Graphics' motion,

finding that "there is absolutely no indication that Quad agreed

to any" assignment, and that it was Gagliano's obligation to

find out "who the heck they're really doing business with" and

negotiate for additional security from that party if it so

desired.

¶25 Gagliano's remaining claims proceeded to trial. At

the close of evidence, Kraft moved for a directed verdict on the

grounds that Gagliano's notice of extension was invalid because

Gagliano did not address the notice to New Electronic Printing

Systems, the tenant at the time notice was given. The circuit

court granted the motion, concluding that "there is a strict

requirement of notice," under which Gagliano needed to serve

Kraft in his capacity as a representative of New Electronic

Printing Systems. In other words, Gagliano needed to address

the notice to "New Electronic Printing Systems, c/o Robert
Kraft," rather than simply to Kraft at New Electronic Printing

Systems' address. Since the circuit court concluded that the

notice of extension was invalid, it dismissed Gagliano's claim

against Kraft and the other defendants.

¶26 Gagliano appealed, arguing that the circuit court

erred when it granted Quad/Graphics' motion for summary judgment

and when it directed a verdict on the notice of extension issue.

11
 No. 2012AP122

The court of appeals reversed both orders.8 Regarding the

directed verdict, it concluded the notice of extension was valid

because "service was made on the correct entity"; "Open First,

Inc., received the benefits of the May 18, 2001, lease"; and

none "of the other documents changed that." Gagliano, 346

Wis. 2d 47, ¶31.

¶27 As to the circuit court's grant of summary judgment,

the court of appeals concluded that Quad/Graphics was liable for

rent for the remainder of the term of the extended leases

because "Gagliano's consent to the assignment of the leases [to

Associated Bank] when New Electronic Printing Systems took over

the Openfirst business was conditioned on" any subsequent third

party to whom New Electronic Printing Systems transferred its

interest assuming "the obligations under and pursuant to the

Leases." Id., ¶35. It further reasoned that Quad/Graphics was

liable because it "accepted the benefits conferred by the

Gagliano leases and their amendments" and the Sublease between

New Electronic Printing Systems and Quad/Graphics was not

8
The court of appeals stated that the appeal asked it "to
review the trial court's grant of summary judgment to
Quad/Graphics dismissing Gagliano's claims against it, and the
trial court's grant of a directed verdict dismissing Gagliano's
claims against New Electronic Printing Systems, LLC, and
Openfirst, LLC." Gagliano, 346 Wis. 2d 47, ¶27. The court did
not relate that Kraft joined the motion for a directed verdict
and participated in the appeal. The court did, however, write
that it was not going to "separately address" Gagliano's claims
against Kraft, which we take as an acknowledgment that the
portion of its decision reversing the directed verdict bound
Kraft, as well as the other defendants. Id., ¶1 n.1.

12
 No. 2012AP122

binding on Gagliano because Gagliano was not a party to it.

Id., ¶36.

¶28 Quad/Graphics petitioned this court for review of the

following issue: "May a landlord recover from its tenant's

subtenant (or more remote subtenants) all future rent that the

immediate tenant had promised to pay, regardless of the terms of

the transfer from tenant to subtenant or the amount of time that

the subtenant occupies the premises?"

¶29 Kraft opposed Quad/Graphic's petition, but in the

event that review was granted, cross-petitioned this court to

review the following issues: (1) whether the court of appeals

properly determined claims involving Kraft; (2) whether the

court of appeals correctly reversed the circuit court's directed

verdict; and (3) whether the court of appeals erred in regard to

the fraud issue Kraft raised. We granted both petitions.

II. DISCUSSION

A. Standard of Review

¶30 This case requires us to review both a directed
verdict and an order granting summary judgment. When an

appellate court reviews the evidentiary basis for a circuit

court's decision to grant a directed verdict, the verdict must

stand unless the record reveals that the circuit court was

clearly wrong. Weiss v. United Fire & Cas. Co., 197 Wis. 2d

365, 389, 541 N.W.2d 753 (1995) (quoting Helmbrecht v. St. Paul

Ins. Co., 122 Wis. 2d 94, 110, 362 N.W.2d 118 (1985)) ("An

appellate court should not overturn a circuit court's decision
to dismiss for insufficient evidence unless the record reveals
13
 No. 2012AP122

that the circuit court was 'clearly wrong.'"). A circuit

court's evidentiary determination is clearly wrong when there is

any credible evidence to support the position of the non-moving

party. See Marquez v. Mercedes-Benz USA, LLC, 2012 WI 57, ¶49,

341 Wis. 2d 119, 815 N.W.2d 314.

¶31 Our review of the circuit court's directed verdict

does not turn on the sufficiency of the evidence. Rather, it

involves the application of undisputed facts to principles of

law. Specifically, we focus on whether a landlord's contractual

notice to a tenant is sufficient when an appropriate person

receives that notice at the appropriate address, but the notice

does not indicate in what capacity the recipient of the notice

is being addressed.

¶32 Although review of a directed verdict ordinarily

focuses on the sufficiency of the evidence, we see no reason

that a directed verdict based on a legal error, rather than an

evidentiary problem, should escape review. We base this

conclusion on our previous observation that summary judgment,
similar to our determination in the present case, "is a legal

conclusion by the court," and can rest on the "same [legal]

theory" as a directed verdict. Steven V. v. Kelley H., 2004 WI

47, ¶35, 271 Wis. 2d 1, 678 N.W.2d 856; Lambrecht v. Estate of

Kaczmarczyk, 2001 WI 25, ¶40 n.23, 241 Wis. 2d 804, 623 N.W.2d

751 (citing 10A Charles A. Wright et al., Federal Practice and

Procedure: Civil § 2713.1, at 242-43 (1998); Daniel P. Collins,

Note, Summary Judgment and Circumstantial Evidence, 40 Stan. L.
Rev. 491, 491 (1988)). Both are appropriate when the moving
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 No. 2012AP122

party is entitled to judgment as a matter of law because there

is no genuine issue, in the case of summary judgment, or

credible evidence, in the case of a directed verdict, to support

the position of the nonmoving party. Wis. Stat. § 802.08(2)

(2011-12);9 Wis. Stat. § 805.14(1). Furthermore, we have

previously construed decisions of a circuit court to conform

with the analysis required to correct an error. Bubb v. Brusky,

2009 WI 91, ¶30, 321 Wis. 2d 1, 768 N.W.2d 903 (construing a

circuit court's dismissal of a claim as if a motion for directed

verdict had been made). As such, we review the legal basis for

the circuit court's directed verdict independently. Tufail v.

Midwest Hospitality, LLC, 2013 WI 62, ¶22, 348 Wis. 2d 631, 833

N.W.2d 586 (the interpretation of a lease, a written contract,

presents a question of law for our independent review).

¶33 This case also requires us to review the circuit

court's grant of summary judgment in favor of Quad/Graphics.

"We review a grant of summary judgment independently, applying

the same methodology as the circuit court" and the court of
appeals, but benefitting from their prior discussions. City of

Janesville v. CC Midwest, Inc., 2007 WI 93, ¶13, 302 Wis. 2d

599, 734 N.W.2d 428. In order to determine whether summary

judgment was appropriate in this case, we must review various

leases among the parties, which again presents a question of law

for our independent review. Tufail, 348 Wis. 2d 631, ¶22.

9
All subsequent references to the Wisconsin Statutes are to
the 2011-12 version unless otherwise indicated.

15
 No. 2012AP122

B. Directed Verdict

¶34 We begin with Gagliano's notice of extension because

if the notice was not valid, we need not reach the issue of

whether Quad/Graphics was an assignee.

¶35 The body of law concerning the notice required to

extend a lease deals almost exclusively with a tenant's right to

extend. E.g., 2 Milton R. Friedman and Patrick A. Randolph,

Jr., Friedman on Leases § 14:2, at 14-45 to -46 (5th ed. 2005)

("A tenant's right of renewal is generally, though not

necessarily, conditioned on giving the landlord prior notice of

the election to renew."); Robert S. Schoshinski, American Law of

Landlord and Tenant § 9:4, 604 (1980) ("The mode of exercise of

an option to renew or extend" usually requires "that notice be

served on the lessor a specified time before expiration of the

original term.").

¶36 In that circumstance, most states require a "tenant

. . . [to] strictly comply with the notice provisions of an

option contract."10 52 C.J.S. Landlord & Tenant § 94 (2014).
This means that major departures from a prescribed method of

notice can render a notice ineffective. For example, a notice

may be invalid if it is late. Dyer v. Ryder Student Transp.

Servs., Inc., 765 A.2d 858, 860 (R.I. 2001). The same holds

true when a tenant utilizes a method of delivery different than

10
See also 63 Am. Jur. Proof of Facts 3d 423 (2013) ("a
provision in a lease requiring notice to a lessor of the
lessee's election to exercise an option to renew or extend the
lease must be strictly complied with").

16
 No. 2012AP122

the lease specified and the notice does not reach the landlord.

W. Tire, Inc. v. Skrede, 307 N.W.2d 558, 562 (N.D. 1981).

Still, "[s]mall variances [from the prescribed method of giving

notice] will not make notice of renewal ineffective."

2 Friedman, supra § 14:2, at 14-47 (citing Beckenheimer's Inc.

v. Alameda Assocs. Ltd. P'ship, 611 A.2d 105, 112-13 (Md. 1992)

(failure to attach a notice of net worth that the lease required

did not render notice invalid)).

¶37 Although we are required to determine in this case

whether the contractual notice provisions have been satisfied,

we note that in Wisconsin, the legislature has set forth the

methods by which a tenant may provide notice of extension. Wis.

Stat. § 704.21(2). These include giving notice to the landlord

personally, giving notice to a competent person in charge of a

landlord's place of business, and mailing the landlord notice by

registered or certified mail. Id. If the landlord is a

corporation, a tenant may provide notice to a corporate officer

by these methods. § 704.21(3). Even if a tenant does not use
one of the enumerated methods to provide notice, the notice is

valid if the landlord has actual notice. § 704.21(5).11

¶38 As previously mentioned, the present case does not

involve a tenant's notice to extend a lease. However, we

consider that body of law relating to the sufficiency of a

11
Actual notice by a landlord to a tenant is likewise
statutorily sufficient in some circumstances, including notice
to terminate a tenancy, notice to inspect a tenant's premises,
and notice of an automatic renewal clause in a residential
lease. Wis. Stat. § 704.21(5).

17
 No. 2012AP122

tenant's notice to extend in order to avoid imposing disparate

standards on landlord and tenant, particularly in a commercial

context.

¶39 Two possible documents potentially govern the issue of

notice in the present case: the original May 22, 2000 lease and

the subsequent amendment commencing October 23, 2003. The

May 22, 2000 lease directed that Gagliano send notices to the

tenant, Electronic Printing Systems, at the Jefferson Street

address. The October 23, 2003 amendment provided that notices

be sent to:

OpenFirst, Inc., successor in interest to Electronic
Printing Systems, Inc.
c/o Robert Kraft
300 N. Jefferson St.
Milwaukee, WI 53203
While the parties dispute which contractual notice provision

governs, we need not resolve that issue because we conclude the

notice was valid under both.

¶40 We begin with the May 22, 2000 lease, which Kraft

claims controls. According to Kraft, Gagliano's notice was

invalid because that lease said that notices should go to the

"tenant," which on December 29, 2005 was New Electronic Printing

Systems. Gagliano's notice did not name that entity, and

instead went to Electronic Printing Systems, Robert Kraft, and

others at the Jefferson Street address.

¶41 Gagliano's notice was valid under the May 22, 2000

lease for at least two reasons. First, the parties never
amended the lease to designate New Electronic Printing Systems

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 No. 2012AP122

as the tenant. Removing the October 23, 2003 amendment from

consideration, the lease required Gagliano to send notices to

Electronic Printing Systems at the Jefferson Street address.

Gagliano did exactly that. Second, even if Kraft were correct

that Gagliano was required to send the notice to New Electronic

Printing Systems, Gagliano did that as well. Gagliano sent the

notice to Kraft, an officer of New Electronic Printing Systems,

at New Electronic Printing Systems' address. That Gagliano

addressed the notice to an officer of New Electronic Printing

Systems simply ensured that an appropriate individual within the

entity received the notice.

¶42 Next, we consider the notice provision in the

October 23, 2003 amendment. Gagliano claims that this document,

not the May 22, 2000 lease, sets forth the controlling method of

giving notice because the parties executed it after New

Electronic Printing Systems acquired the leases. Under the

amendment, Gagliano was to send notices to "OpenFirst, Inc.,

successor in interest to Electronic Printing Systems." Gagliano
sent the notice to Openfirst, but did not designate that

entity's status as "successor in interest to Electronic Printing

Systems." Because Gagliano sent the correct entity the notice

at the correct address, we cannot conclude that such an omission

renders the notice invalid.

¶43 Finally, even if Gagliano's notice were defective

under either document, undisputed evidence shows that New

Electronic Printing Systems had actual notice that Gagliano was
exercising a right of extension. Kraft admitted that he could
19
 No. 2012AP122

accept notices on behalf of New Electronic Printing Systems and

that he did, in fact, receive Gagliano's notice. Although Kraft

vigorously disputes whether Gagliano lawfully inserted a

landlord's right of extension in the lease, he cannot reasonably

contend that New Electronic Printing Systems was unaware that

Gagliano was exercising what Gagliano asserted was its right to

extend.

¶44 Having concluded the notice was valid, we affirm the

portion of the decision of the court of appeals, albeit on

different grounds.12 We remand to the circuit court for

12
The court of appeals concluded that the notice of
extension was valid for the following two reasons:

(1) service was made on the correct entity ('Open
First, Inc.'), and we see no reason not to apply the
general principle that we disregard errors that 'do
not affect substantial rights,' see Wis. Stat. Rule
805.18(1) (parenthetical text omitted); and (2) Open
First, Inc., received the benefits of the May 18,
2001, lease and under the law we have already
recognized was therefore bound by the . . . extension
clause adopted by the May 18 lease.

Gagliano, 346 Wis. 2d 47, ¶31.

We disagree that there is "no reason not to apply" Wis.
Stat. § 805.18(1). That statute applies to "any error or defect
in the pleadings or proceedings," whereas the notice at issue in
this case is purely contractual.

20
 No. 2012AP122

determination of Kraft's remaining arguments, including whether

Gagliano fraudulently inserted the extension provision into the

May 22, 2000 lease and whether that provision materially altered

his obligations under the guarantee.13 Because Quad/Graphics'

liability can be determined independently of the notice issue,

however, we turn to the issue of whether Quad/Graphics was an

assignee of New Electronic Printing Systems.

C. Summary Judgment

¶45 Quad/Graphics argues that the court of appeals erred

in reversing the circuit court's grant of summary judgment

because Quad/Graphics was a subtenant, not an assignee, of New

Electronic Printing Systems and, therefore, was not liable to

As to the court of appeals' second rationale, we explain in
the next section that we cannot allow the general principle that
"[a] party that accepts a contract's benefits is bound to its
burdens" to eviscerate the longstanding distinction between an
assignment and a sublease. Id., ¶28. For the moment, however,
we note that Gagliano concedes that it "did not appeal the trial
court's ruling that Kraft did not guaranty the May 18, 2001
Lease . . . but . . . appeal[s] [only] the trial court's ruling
that Kraft was not liable under his guaranty for the May 22,
2000 Lease, and its October 23, 2003 Amendment."
13
Because Kraft prevailed on the notice issue at the
circuit court level and did not receive a dispositive adverse
determination from the circuit court on the fraud or guarantee
issues, Kraft had no reason to cross appeal the circuit court's
order directing a verdict in his favor. As such, we cannot say
that he has abandoned these claims on appeal. Additionally,
when Gagliano appealed the order of the circuit court, the court
of appeals should not have decided the factual issue of fraud
and the related factual issue of the guarantee. Gottsacker v.
Monnier, 2005 WI 69, ¶35, 281 Wis. 2d 361, 697 N.W.2d 436 (the
court of appeals cannot make factual determinations where the
evidence is in dispute).

21
 No. 2012AP122

Gagliano for any unpaid rent. According to Quad/Graphics, the

court of appeals ignored long-standing precedent that recognizes

that a landlord may "recover unpaid rent from both its tenant

and that tenant's 'assignee,' [but] may not do so from its

tenant's mere 'subtenant.'"

¶46 Gagliano concedes that "a legitimate sublessee is

[not] liable to the landlord for unpaid rent." Its argument is

that Quad/Graphics was not a "legitimate sublessee" because it

was an assignee, rather than a subtenant, since the primary

lease prohibited subleasing without Gagliano's consent.

Gagliano also argues that Quad/Graphics was actually an assignee

because the substance of the transaction between New Electronic

Printing Systems and Quad/Graphics transferred the entire

remainder of the former's leasehold estate. We conclude that

Quad/Graphics was not an assignee of New Electronic Printing

Systems and, therefore, is not liable to Gagliano for any unpaid

rent.

1. Assignment/Sublease general principles
¶47 As early as 1864, we recognized a principle dating

back to feudal law that a tenant who transfers the entire

remainder of his estate, thereby retaining no reversionary

interest, creates an assignment of the lease, while a tenant who

transfers something less, creates a new contractual

relationship. Cross v. Upson, 17 Wis. 638 (*618), 643 (*623)

(1864) (distinguishing between an assignment and "an under-

tenancy, which is the relation ordinarily established between
the lessee and the party in possession by proof that there was
22
 No. 2012AP122

no assignment"); 1 Milton R. Friedman and Patrick A. Randolph,

Jr., Friedman on Leases § 7:4.3, at 7-85 (5th ed. Rel. #24,

2014) ("[t]he ancient technical system of feudal law based the

landlord-tenant relation on the existence of a reversion"). We

affirmed this distinction more recently in Cranston v. Bluhm, 33

Wis. 2d 192, 201, 147 N.W.2d 337 (1967), in which we explained:

[T]he basic distinction between an assignment and a
sublease is that by the former the lessee conveys his
whole interest in the unexpired term leaving no
reversion in himself, while the latter transfers a
part only of the leased premises for a period less
than the original term.
(quoting 3A George W. Thompson, Commentaries on the Modern Law

of Real Property, § 1210, at 48-49 (1981)). Put another way,

"an assignment is the transfer of the existing lease, whereas a

sublease is the creation of a new tenancy between the original

tenant and the subtenant." 5 Thompson on Real Property, Second

Thomas Edition §42.04(d), at 324 (David A. Thomas & N. Gregory

Smith eds., 2007).

¶48 This distinction is grounded in principles of privity

of estate and privity of contract, both of which can be conveyed

by a lease. Schoshinski, supra §§ 1:1, at 8:1. Privity of

estate means "[a] mutual or successive relationship to the same

right in property." Black's Law Dictionary 1320 (9th ed. 2009);

see Schoshinski, supra § 8:1, at 532. To say that transferring

privity of estate transfers the same rights in property is

another way of saying that the transferee stands in the shoes of

the transferor.

23
 No. 2012AP122

¶49 Privity of contract is a different creature. It

refers to the contractual relationship between parties, who are,

of course, free to negotiate for any term within the confines of

the law. Schoshinski, supra § 8:1, at 532; see generally Queen

Ins. Co. of Am. v. Kaiser, 27 Wis. 2d 571, 574, 135 N.W.2d 247

(1965) (quoting Anno. 175 A.L.R. 8, 86) ("the landlord and

tenant relationship is not a matter of public interest, but

relates exclusively to the private affairs of the parties

concerned and that the two parties stand upon equal terms").

¶50 The distinction between assignment and sublease, or

privity of estate and privity of contract, is paramount in this

case. This is so because by accepting an "assignment——

regardless of landlord's consent thereto——[an] assignee acquires

an interest in the premises that brings him into privity of

estate with the owner and makes him liable to the owner for the

payment of rent and on those tenant covenants that run with the

land." 1 Friedman, supra § 7:5.1, at 7-105; 52 C.J.S. Landlord

& Tenant § 52 (2014) (an assignee "assumes [some of] the
burdens, as well as the benefits, flowing from the original

contract" for the entire term of the assignor's lease with the

original landlord); Thomas, supra § 42.04(d), at 324 ("An

assignment will . . . bind the assignee to all covenants that

24
 No. 2012AP122

run with the land . . ., including rent, . . . [while] a

subtenant is bound only to the sublease itself.")14

¶51 In contrast, when an occupant is a subtenant, the

subtenant is liable only to the tenant for the rent agreed upon

between those parties. 1 Friedman, supra § 7:7.1, at 7-123 to

-24. There is neither privity of estate nor privity of contract

between landlord and subtenant. Id.

¶52 The decision of the court of appeals did not address

this distinction. Quoting language from the November 4, 2002

Landlord's Consent Agreement in which Gagliano consented to the

New Electronic Printing Systems' assignment of the leases as

collateral to Associated Bank, the court of appeals concluded

that Quad/Graphics was liable for rent owed under the extended

leases because Gagliano conditioned its consent to the

assignment upon any subsequent transferee assuming liability for

the obligations under the leases. We cannot accept this

reasoning.

¶53 Quad/Graphics was not party to the November 4, 2002
Landlord's Consent Agreement wherein Gagliano consented to New

14
Gagliano claims that at least some of an assignee's
obligations are now defined by statute. In Lincoln Fireproof
Warehouse Co. v. Greusel, 199 Wis. 428, 437-38, 227 N.W. 6
(1929), we concluded that an assignee had no liability for the
remaining term of a lease when the assignee abandoned the
premises and the landlord accepted surrender and repossessed the
property, thereby terminating privity of estate. Gagliano
argues that the adoption of Wis. Stat. § 704.29(1) abrogates the
ability of an assignee to avoid liability in this manner by
providing that a landlord's claim for unpaid rent applies to
assignees. Because we conclude that Quad/Graphics was a
subtenant, not an assignee, we do not evaluate this argument.

25
 No. 2012AP122

Electronic Printing Systems' assignment of the leases as

collateral to Associated Bank. Quad/Graphics also was not party

to the November 6, 2002 Asset Purchase Agreement for which

Gagliano consented to the principal tenants' assignment of the

leases to New Electronic Printing Systems. Because

Quad/Graphics was not a party to the Landlord's Consent

Agreement on which the court of appeals relies, the obligations

attendant to that contract do not apply to Quad/Graphics.

¶54 The court of appeals also reasoned that "Quad/Graphics

accepted the benefits conferred by the Gagliano leases and their

amendments, which were . . . disclosed to it in the July 6,

2006, Membership Interest Purchase Agreement. Therefore,

Quad/Graphics cannot disclaim or avoid its liabilities for the

burdens imposed by those leases and amendments——including the

lease-extension terms." Gagliano, 346 Wis. 2d 47, ¶36. The

problem with this conclusion, as Quad/Graphics points out in its

brief, is that every occupant can be said to have "accepted the

benefits" of the underlying lease in the broad sense used by the
court of appeals. By this logic, all occupants would be

26
 No. 2012AP122

assignees, and the distinction between assignment and sublease

would be swallowed whole.15

¶55 Having explained the distinctions between assignee and

subtenant and relative obligations of each regarding payment of

rent, we turn to the remaining issue in this review: whether

Quad/Graphics was an assignee of the Gagliano leases.

2. Quad/Graphics' Status

¶56 In determining whether an occupant of a premises is an

assignee or a subtenant of the original tenant, we begin with a

presumption that an occupant, other than the original tenant who

pays rent directly to the landlord, is an assignee of the

original tenant, not a subtenant. Cross, 17 Wis. at 643 (*623)

("the law infers an assignment from the fact of entry and

occupation[; a] like presumption arises from payment of rent");

Mariner v. Crocker, 18 Wis. 264 (*251), 267 (*254) (1864)

(citing Cross for "the presumption that a party found in

possession of demised premises was there as assignee of the

lessee"); 1 Friedman, supra § 7:5.1, at 7-107 ("When a party

15
Additionally, we note that the cases the court of appeals
cites for this proposition dealt with parties to an earlier
contract. Meyers v. Wells, 252 Wis. 352, 357, 31 N.W.2d 512
(1948) (employing a presumption that an employee who worked for
several years after his employment contract expired continued to
work under the terms and conditions of the contract); S & O
Liquidating P'ship v. Comm'r, 291 F.3d 454, 459 (7th Cir. 2002)
(quoting Skelton v. GM Corp., 860 F.2d 250, 260 (7th Cir. 1988))
(former partners in an accounting firm who signed a closing
agreement could not participate in a global settlement because
"[a] party who has accepted the benefits of a contract cannot
'have it both ways' by subsequently attempting to avoid its
burdens").

27
 No. 2012AP122

other than the tenant is shown to be in possession of the

premises, and paying rent therefor, there is a presumption that

the lease has been assigned to him."). What is required in

order to rebut this presumption is less clear.

¶57 The majority of cases "have treated a transfer of the

entire term [of the lease]" as dispositive of an assignment.

Thomas, supra § 42.04(d), at 326. Our statement in Cross that a

party can rebut a presumption of assignment by showing that an

occupant "charged as assignee never in fact had an assignment of

the lease" seems to state the majority rule. Cross, 17 Wis. at

643 (*623).

¶58 In a later case citing Cross, however, we stated that

"[a]ny language which shows the intention of the parties to

transfer the property from one to the other is sufficient."

Cranston, 33 Wis. 2d at 201 (quoting 3A Thompson, supra § 1210,

at 51) (emphasis added). This focus on intent, rather than

transfer in fact, seems to fall in line with an alternative line

of cases that ask "whether the parties intended to assign the
primary lease to the transferee, or intended to create a

separate tenancy." Thomas, supra § 42.04(d), at 326 (collecting

cases); see also Schoshinski, supra § 8:11, at 558 ("the most

sensible way to distinguish between an assignment and a sublease

is that adopted by the Arkansas court in Jaber v. Miller16 'that

the intention of the parties is to govern.'")

16
Jaber v. Miller, 239 S.W.2d 760, 764 (Ark. 1951).

28
 No. 2012AP122

¶59 It is unnecessary to delve further into this

distinction at this time for two reasons. First, it may well be

that "the intent approach adds little to the traditional

analysis[] since courts will typically discern intent by looking

to see whether a reversion or right of entry has been retained."

Thomas, supra § 42.04(d), at 327. More importantly, the present

case does not require us to decide between the approaches, even

if they are distinct, because we conclude that Quad/Graphics and

New Electronic Printing Systems intended to enter into a

sublease and New Electronic Printing Systems did transfer less

than its entire remaining leasehold estate.

¶60 Both approaches to the assignment/sublease distinction

focus on the transaction between tenant and the subsequent

occupant. As such, we begin with the two agreements those

parties, New Electronic Printing Systems, who was the tenant at

the relevant time, and Quad/Graphics, created on June 23, 2008:

the Voluntary Surrender Agreement and the Sublease.

¶61 Quad/Graphics argues that the Sublease is the proper
focus of our analysis. Quad/Graphics explains that the

Voluntary Surrender Agreement expressly excludes the leases from

surrender and that the parties entered into the Sublease in

order to convey the portion of the leasehold estate necessary to

affect the surrender of other collateral. The term of the

Sublease was four months, ending October 31, 2008 or sooner upon

20 days notice by New Electronic Printing Systems. It did not

29
 No. 2012AP122

include the remainder of the extended leases, which continued to

June 23, 2010 and January 23, 2012, respectively.17

¶62 We agree with Quad/Graphics that the Sublease is

sufficient to show that New Electronic Printing Systems did not

intend to and did not convey its entire leasehold estate because

only four months of the remaining lease term were conveyed.

Also, the lease unequivocally shows that the parties intended to

enter into a sublease. The parties labeled the document a

sublease, provided that Quad/Graphics would have "no liability

under any lease of the Premises from the fee owner thereof" and

"no obligations to [Gagliano] arising out of or relat[ing] to

this Sublease," and that Quad/Graphics was "not assuming the

Primary Lease." See Tufail, 348 Wis. 2d 631, ¶25 (quoting Kernz

v. J.L. French Corp., 2003 WI App 140, ¶9, 266 Wis. 2d 124, 667

N.W.2d 751 (in attempting to give effect to contracting parties'

intentions, "unambiguous contract language controls").

¶63 Gagliano argues that the Sublease was invalid because

the primary lease prohibited subleasing without Gagliano's
consent, which New Electronic Printing Systems never obtained.

Gagliano asks us to classify the document as an assignment;

however, the primary lease likewise prohibited assignments

without Gagliano's consent. Perhaps in anticipation of the

logical problem this argument presents, Gagliano casts his

17
This statement should not be interpreted as our view that
Kraft's allegation that Gagliano improperly inserted a right to
extend into the leases has no merit. As explained previously,
we take no position on this issue, and remand it to the circuit
court.

30
 No. 2012AP122

argument in terms of fairness to the landlord. Specifically, he

contends that the invalid Sublease may not be used "for any

purpose" and may not "limit the landlord's rights." We find no

support in the law for adding a consideration of fairness to the

landlord to the test for determining whether a subsequent

occupant becomes a sublessee or an assignee.

¶64 As with the leases in the present case, the lease in

Cross required the landlord's consent to sublet or assign, which

the tenant did not obtain, yet we concluded that the tenant

could rebut the presumption of assignment by the actions of the

parties. Cross, 17 Wis. at 640, 643 (*620-21, 623). This is so

because an occupant charged with an assignment need not prove

the validity of a sublease, but rather must rebut the

presumption of an assignment. See id. at 643 (*623) (an

occupant that enters with the lessee's consent, but without

assignment, "must be an under-tenancy of some kind, for years,

from year to year, at will or by sufferance"); see generally

Lamonts Apparel, Inc. v. SI–Lloyd Assocs., 967 P.2d 905, 908
(Or. Ct. App. 1998) (concluding that a contract that did not

meet the requirements for a valid assignment or sublease did not

trigger the obligations of either, thus illustrating the basic

principle that assignment and sublease are not the only two

types of leasehold estates). As such, we conclude that although

a sublease entered into without the landlord's consent may be

voidable at the election of the landlord and give rise to a

breach of contract claim, it can be used for the purpose of
rebutting a presumption of assignment.
31
 No. 2012AP122

¶65 Although fairness to the landlord does not appear to

be a proper consideration when determining whether a transfer is

a sublease or assignment, we nonetheless note that our

conclusion does not "limit the landlord's rights," as Gagliano

contends, because the landlord does not have the right to treat

any sublease in violation of the primary lease as an assignment.

The landlord's rights in such a situation are limited to

eviction of the subtenant and breach of contract action against

the primary tenant. John F. Thompson, 2 Wisconsin Property Law

Series: Drafting Commercial Leases 21 (1968) ("If [a] lease

contains a provision prohibiting the assignment or subletting

without the consent of the landlord, and a tenant does in

violation of this provision sublet or assign without the consent

of the landlord, such action on the part of the tenant

constitutes a breach of the lease, justifying termination of the

lease or any other remedy available to the landlord."). To

conclude otherwise would be to hold a nonparty to the primary

lease liable for the primary tenant's breach.
¶66 Gagliano's second argument is that although the

Sublease may have purported to transfer only a portion of the

remaining leasehold estate, the substance of the transaction as

a whole transferred the entire remainder. Specifically,

Gagliano contends that because the Voluntary Surrender Agreement

"gave Quad/Graphics the exclusive right to occupy the leased

premises for the remaining lease term" and "did not provide New

[Electronic Printing Systems] with any reversionary interest in
the premises" the transaction constituted an assignment of the
32
 No. 2012AP122

leases. Quad/Graphics' right to occupy was exclusive, according

to Gagliano, because Quad/Graphics had complete control over the

conditions by which New Electronic Printing Systems could end

Quad/Graphic's right to store its collateral: satisfaction of

New Electronic Printing Systems obligations to Quad/Graphics in

full or disposition of the collateral. In sum, Gagliano argues

that the "character of the agreement" was an assignment, not a

sublease. Again, we disagree.

¶67 The Voluntary Surrender Agreement did not transfer the

May 22, 2000 lease from New Electronic Printing Systems to

Quad/Graphics because the tenant under the lease and the

subsequent occupant had different rights. For example, under

the Voluntary Surrender Agreement, Quad/Graphics could end its

obligation to pay rent by disposing of the collateral. New

Electronic Printing Systems had no such ability under the leases

with Gagliano. The Voluntary Surrender Agreement also provided

that New Electronic Printing Systems could terminate

Quad/Graphics' right to store collateral by satisfying its
obligations in full to Quad/Graphics. Again, New Electronic

Printing Systems had no such right under the leases with

Gagliano. Because the terms of the May 22, 2000 lease and

Voluntary Surrender Agreement so differ, we cannot say that New

Electronic Printing Systems assigned the lease to Quad/Graphics.

See Lamonts Apparel, 967 P.2d at 908 (concluding that there is

no assignment when a purported sublease differs from the primary

lease in significant respects). That Quad/Graphics, not New
Electronic Printing Systems, was the party who could satisfy the
33
 No. 2012AP122

conditions necessary to end Quad/Graphics' obligations to New

Electronic Printing Systems under the Sublease is not germane.

The question is whether New Electronic Printing Systems

transferred or intended to assign the Gagliano leases to

Quad/Graphics. That Quad/Graphics could end its obligation to

pay rent before the May 22, 2000 lease expired on June 23, 2010

is support for our conclusion that New Electronic Printing

Systems did not make an assignment.

¶68 Furthermore, Gagliano's focus on the Voluntary

Surrender Agreement is misplaced because that agreement

specifically excluded the leases that underlie this action from

what was being surrendered when it stated, "[f]or the avoidance

of doubt, the Collateral shall not include any lease for real

property of which any Debtor is a party." We conclude that the

Sublease and Voluntary Surrender Agreement, when taken together,

show that New Electronic Printing Systems and Quad/Graphics

intended a sublease. Whether the Sublease was not "legitimate,"

i.e., entered into without Gagliano's consent, is of little
concern because it did not transfer the entire remainder of New

Electronic Printing Systems' leasehold estate to Quad/Graphics.

¶69 Having concluded that Quad/Graphics was not an

assignee of New Electronic Printing Systems' lease, we also

conclude that Gagliano cannot recover rent allegedly owed under

the extended leases based on privity of estate. Accordingly, we

reverse the portion of the decision of the court of appeals that

reversed an order of the circuit court granting Quad/Graphics'
motion for summary judgment.
34
 No. 2012AP122

III. CONCLUSION

¶70 This case presents two issues for our review: (1)

whether Gagliano gave sufficient notice to extend the leases to

the time when the alleged breach occurred; and (2) whether

Quad/Graphics was a subtenant of the lessee or an assignee of

the leases. As to the first issue, we conclude that Gagliano's

notice was valid. Gagliano provided notice: (1) to the entity

designated as the tenant on the original lease; (2) to the

entity who was the current tenant at the time of the notice; and

(3) to the entity a subsequent amendment of the lease designated

as the tenant. The notice is also valid because the current

tenant at the time Gagliano sent the notice had actual notice

that Gagliano was exercising its alleged right to extend the

leases. Accordingly, we affirm the portion of the decision of

the court of appeals that reversed the circuit court's directed

verdict, which had concluded that Gagliano's notice was not

valid. We remand to the circuit court for fact-finding

necessary to decide the merits of Kraft's remaining arguments
relating to the lawfulness of the extension provision in the

leases.

¶71 In regard to the second issue, we conclude that

Quad/Graphics is not liable to Gagliano because Quad/Graphics

was a subtenant of the lessee, not an assignee of the leases.

Undisputed evidence shows that New Electronic Printing Systems,

the assignee of the original tenants, did not transfer its

entire remaining leasehold estate to Quad/Graphics. Because
Gagliano and Quad/Graphics did not share privity of estate, it
35
 No. 2012AP122

is not an assignee. Therefore, we do not hold Quad/Graphics

liable for New Electronic Printing Systems' alleged breach of

contract to which Quad/Graphics was not a party. Accordingly,

we reverse the portion of the decision of the court of appeals

that reversed the order of the circuit court granting summary

judgment in favor of Quad/Graphics and remand to the circuit

court for dismissal of all claims against Quad/Graphics.

By the Court.—The decision of the court of appeals is

affirmed in part, reversed in part and the cause remanded to the

circuit court.

36
 No. 2012AP122.awb

¶72 ANN WALSH BRADLEY, J. (concurring in part,

dissenting in part). This case addresses two issues: (1)

whether Quad/Graphics was a subtenant or assignee and (2)

whether the notice of lease extension that Gagliano provided was

legally sufficient.

¶73 I agree with the majority when it concludes that Quad

Graphics is a subtenant. Because the tenant did not transfer

all rights in the lease to Quad Graphics and it was not in

privity of estate with the landlord, Quad Graphics was not an

assignee. Therefore, I join Part C of the majority opinion.

¶74 However, I part ways with the majority on the issue of

the sufficiency of the notice. For the reasons set forth in the

dissent, I agree that the majority opinion is not convincing as

a matter of statutory interpretation or corporate and agency

law. Therefore, I join Part I of the dissent.

¶75 Accordingly, I respectfully concur in part and dissent

in part.

1
 No. 2012AP122.ssa

¶76 SHIRLEY S. ABRAHAMSON, C.J. (dissenting). The

instant case seems to present a complex fact and legal

situation, although the court of appeals discounted the

complexity, writing that "this appeal has a veneer of

complexity."1

¶77 I write only on the issue of the sufficiency of the

landlord's notice to the tenant of the extension of the lease.

This case presents a narrow issue: What does a landlord have to

do to give notice to a tenant corporation of an extension of the

commercial lease, when the lease and the statutes are silent on

the issue of notice? Notice is a dispositive issue in the

instant case, majority op., ¶34, and I need not address other

issues addressed by the majority opinion.

¶78 The majority opinion phrases the question to be

answered as "whether a landlord's contractual notice to a tenant

is sufficient when an appropriate person receives that notice at

the appropriate address, but the notice does not indicate in

what capacity the recipient of the notice is being addressed."
Majority op., ¶31.

¶79 The majority opinion loses sight of the fact that an

individual in his or her personal capacity, an individual in his

or her representative capacity, and a corporation are separate

and apart under the law. Robert Kraft individually; Robert

Kraft as president of the corporation, New Electronic Printing

Systems; and the current corporate tenant itself, New Electronic

1
Anthony Gagliano & Co., Inc. v. Openfirst, LLC, 2013 WI
App 19, ¶26, 346 Wis. 2d 47, 828 N.W.2d 268.

1
 No. 2012AP122.ssa

Printing Systems are, under the law, three different, separate

persons.

¶80 These distinct persons complicate the issue of

sufficiency of notice, which arises in numerous situations——some

regulated by statute, others by contract or the like. When the

person to be notified is a corporation, the identity of the

appropriate individual to receive notice depends on the facts

and circumstances of each situation. Notice to a corporation is

governed by the general principle that a "corporation enjoys a

legal identity separate and apart from its shareholders,

directors, and officers."2

¶81 Deciding whether the notice given is sufficient to be

notice to the corporation includes such issues as: to what

individual notice must be given to give notice to the

corporation; when, how, and where notice must be given; whether

notice was in strict compliance with the applicable

requirements; whether notice was in substantial compliance with

the applicable requirements;3 and whether actual notice (that is,

2
1 William Meade Fletcher et al., Cyclopedia of the Law of
Corporations § 25 (perm. ed., rev. vol. 2006) (citing, inter
alia, Security Bank v. Klicker, 142 Wis. 2d 289, 418 N.W.2d 27
(1987)).
3
The majority opinion is correct in stating that small
variances generally will not make notice ineffective. Majority
op., ¶36 (citing Beckenheimer's Inc. v. Alameda Assocs. Ltd.
P'ship, 611 A.2d 105, 112-13 (Md. 1992)). However, the case
cited by the majority opinion does not necessarily illustrate
the minuteness of variances allowed because the case also
involves ambiguous terms being construed against the plaintiff.
Beckenheimer's Inc., 611 A.2d at 111.

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knowledge) can overcome notice that does not comply with the

applicable requirements.

¶82 Numerous leases and amendments were negotiated in the

instant case. The tenant corporation kept changing, at least in

name. The leases and amendments do not always state the name of

the corporation that is the tenant; some merely state notice is

to be given to "the tenant." The leases and amendments in the

instant case do not always reveal the individual to whom notice

is to be given to constitute notice to a corporation tenant.

¶83 The majority opinion concludes that the landlord's

addressing the notice to Robert Kraft "ensured that an

appropriate individual within the [corporate] entity received

the notice." Majority op., ¶41.

¶84 The majority opinion's conclusion is based on two

faulty reasons:

(1) The majority opinion applies Wis. Stat. § 704.21(3) to

the instant case. This statute provides that notice

by a tenant to a corporation landlord may be conveyed
by notice to an officer of the corporation. The

statute, however, explicitly governs only a tenant's

More analogous examples include American Oil Co. v. Rasar,
308 S.W.2d 486, 491 (Tenn. 1957) (reasoning that notice was
invalid because it was sent to the original lessors when the
lease required notice to be sent to assignees of lessors);
Western Tire, Inc. v. Skrede, 307 N.W.2d 558, 562 (N.D. 1981)
(reasoning that notice was invalid because the notice was sent
by ordinary mail instead of certified or registered mail); and
Bernier v. Benson, 159 N.E.2d 39, 41 (Ill. Ct. App. 1959)
(reasoning that notice was invalid when notice was provided by a
partnership, but the lessees actually were the individuals that
made up the partnership).

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notice to a landlord of extension of a lease, and the

present case involves a landlord's notice to a tenant.

Majority op., ¶37-38.

(2) Without analysis of corporation and agency law

recognizing the separateness of a corporation and

individuals associated with the corporation, the

majority opinion treats an individual who is

guarantor, an individual who is an officer of the

corporation, and the corporation as if they are one

and the same.

¶85 Robert Kraft is an officer of New Electronic Printing

Systems. Robert Kraft was not the "tenant." New Electronic

Printing Systems was the tenant. The landlord knew that New

Electronic Printing Systems was the tenant. Robert Kraft,

individually, was a guarantor under the lease. A careful

landlord would have given Robert Kraft notice in his individual

capacity as a guarantor to protect the landlord's rights against

the guarantor.
¶86 I dissent because I am not persuaded by the majority

opinion's reasoning and believe that it may have troublesome,

unforeseen consequences.

I

¶87 To reach its result, the majority opinion misapplies

Wis. Stat. § 704.21 to the notice at issue in the present case——

a landlord's notice to the tenant of extension of the lease.

This statute explicitly regulates only a tenant's notice to a
landlord to extend a lease. See majority op., ¶37. The

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legislature singled out a tenant's extensions of leases and

enacted a statute to govern tenants, not landlords.

¶88 Contrary to the plain text of the statute, the

majority opinion expands the statute to govern the landlord's

notice to a tenant in the present case.

¶89 The majority opinion does not use the usual tools of

statutory interpretation to extend the statute beyond its text

in the present case; the majority opinion does not analyze the

text, context, purpose, or statutory or legislative history.4

¶90 Rather, the majority opinion reasons that the court

does not want to create "disparate standards" on landlord and

tenant, particularly for commercial tenants and commercial

landlords. Majority op., ¶38. "Why not?" I ask. No answer is

given in the majority opinion.

¶91 Thus, the majority opinion is not convincing as a

matter of statutory interpretation. The majority opinion relies

on a statute that by its very words does not apply to the

instant case and now leaves many questions unanswered regarding
the statute's applicability to other landlord-tenant agreements

and disputes.

¶92 The majority opinion is not convincing as a matter of

corporate law and agency law. The majority opinion conflates

the individual, Kraft, and the corporate entity, New Electronic

Printing Systems. The circumstances of the instant case do not

bear out this conflation of the person and the corporation.

4
See majority op., ¶37-38.

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 No. 2012AP122.ssa

¶93 Robert Kraft's admission that he could accept notice

on behalf of the corporation does not mean that, in the instant

case, notice to Kraft in his personal capacity constituted

notice to the corporation. Rather, the general rule is that

notice to an officer of a corporation is notice to a corporation

only when, amongst other requirements, the "notice . . . comes

to . . . the agent in his or her official or representative

capacity."5 Put differently, "[s]uch notice, to be binding upon

the principal, must be notice to the agent when acting within

the scope of his agency, and must relate to the business, or, as

most of the authorities have it, the very business, in which he

is engaged, or is represented as being engaged, by authority of

his principal." Congar v. Chicago & N.W. Ry. Co., 24 Wis. 157,

160 (1869).6

¶94 In the instant case, Robert Kraft was not named in the

notice in his representative capacity and nothing in the record

demonstrates that Kraft accepted service of notice in his

representative capacity on behalf of New Electronic Printing

5
3 William Meade Fletcher et al,, Cyclopedia of the Law of
Corporations § 793, at 34-35 (perm. ed., rev. vol. 2010). See
also Tele-Port, Inc. v. Ameritech Mobile Communic'ns, 2001 WI
App 261, ¶7, 248 Wis. 2d 846, 637 N.W.2d 782 ("[C]orporation is
charged with constructive knowledge, regardless of its actual
knowledge, of all material facts of which its officer or agent
receives notice or acquires knowledge while acting in the course
of his employment within the scope of his authority . . . .")
(emphasis added, internal quotation marks omitted).
6
See also 1 Restatement (Third) of Agency § 5.02(1) (2006)
("A notification given to an agent is effective as notice to the
principal if the agent has actual or apparent authority to
receive the notification . . . .") (emphasis added).

6
 No. 2012AP122.ssa

Systems.7 The notice of lease extension document did not state

that notice was given to Robert Kraft in his representative

capacity on behalf of New Electronic Printing Systems. Indeed,

no reference was made to New Electronic Printing Systems

anywhere in the notice. Simply because Kraft was an officer of

New Electronic Printing Systems does not mean he was provided

notice in a representative capacity.

¶95 In the instant case, Robert Kraft, as an individual,

was a guarantor under the lease and would have received notice

in his individual capacity.

¶96 Notice came to Robert Kraft in his individual

capacity; he had an individual interest in the matter. Notice

did not come to Robert Kraft in his representative capacity or

regarding his actual or apparent authority to act as agent of

New Electronic Printing Systems.8 Whether notice to Robert Kraft

individually was notice to the corporation might well be a

question of fact requiring resolution at trial.9

II
¶97 If the reader is not persuaded that notice to Robert

Kraft in his individual capacity was notice to the corporation,

the majority opinion provides a fail-safe reason justifying the

sufficiency of the notice, assuring us that the corporation had

7
Kraft was identified in the landlord's notice of extension
as "Robert Kraft," rather than "New Electronic Printing Systems
c/o Robert Kraft" or similar language.
8
See 3 Fletcher, supra note 5, § 793, at 35.
9
See id.

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"actual notice" that the landlord was extending the lease.10 In

a single conclusory sentence, the majority opinion declares that

Robert Kraft "cannot reasonably contend that New Electronic

Printing Systems was unaware that [the landlord] was exercising

what [the landlord] asserted was its right to extend." Majority

op., ¶43. "Why not?" I ask.

¶98 The majority opinion speaks of "actual notice" and

"awareness," but the majority opinion obviously means

"knowledge." The majority opinion imputes Robert Kraft's

knowledge of the landlord's extension of the lease to the

corporation, without considering that "[t]here may be a

difference between the effect of notice expressly given an

officer or agent of a corporation, as binding the corporation,

and knowledge acquired by such an officer or agent."11 Again,

the majority opinion conflates the individual and the corporate

entity.

¶99 In any event, the general rule is that a corporation

is charged with constructive knowledge, regardless of its actual
knowledge, of all material facts of which its officer or agent

receives notice or acquires knowledge while acting within the

scope of his or her authority, but does not have constructive

knowledge of facts learned by its officer or agent outside the

scope of his or her agency:12
10
Majority op., ¶2.
11
Notice and knowledge need not have the same effect. 3
Fletcher, supra note 5, § 791.
12
See Congar v. Chicago & N.W. Ry. Co., 24 Wis. 157, 160
(1869); 3 Fletcher, supra note 5, § 790, at 16-17, 26.
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Knowledge acquired or notice received by an agent
which does not pertain to the duties of the agent,
which does not relate to the subject matter of the
employment, or which affects matters outside the scope
of his [or her] agency is not chargeable to the
principal unless actually communicated to [the
13
principal].
¶100 The majority opinion does not tackle this question of

imputing Robert Kraft's knowledge to the corporation in a

satisfactory manner.

¶101 Because the majority opinion fails to explain or

employ the applicable rules of landlord-tenant law, corporate

law, and agency law to the instant case, and fails to furnish a

persuasive rationale that governs the present case or will

govern other cases involving notice to a corporation and

knowledge of a corporation, I do not join this part of the

majority opinion.

13
Philipp Lithographing Co. v. Babich, 27 Wis. 2d 645, 650
n.4, 135 N.W.2d 343 (1965) (quoting 3 Am. Jur. 2d Agency § 276,
at 639).

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